X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
“David Smith” isn’t letting his failure to pay his electricity bill keep him in the dark. Since December, the Miami man has rigged a series of illegal setups to keep power flowing to his one-bedroom apartment. He says he’s jammed metal sticks into his meter to keep it from recording electricity, used jumper cables to piggyback onto a neighbor’s current, and strung an extension cord out his window to plug into an outdoor outlet. His latest ploy: Using a hot-wire system to bypass his meter altogether. “Listen, I’m going to ride it out for as long as I can,” says Smith, who doesn’t want his real name used. “Trust me, it’s worse than you think. A lot of people around here — some you would never even [assume] — are stealing electricity.” Electricity theft, current diversion — call it what you want, experts say thieves in the U.S. are helping themselves to billions of dollars worth of power every year. But now, soaring generation costs, additional scrutiny from regulators and impending deregulation of the electricity industry are prompting utilities to take a harder line toward theft. And that means more utilities are stepping up meter tampering investigations and boosting funding for investigation departments, industry experts say. “It’s always been there. The more you look for it, the more you are going to find. It’s a problem and it’s always going to be a problem,” says Ralph Abbott, president of Plexus Research, a Massachusetts company that this year completed a study on energy theft in the U.S. for the Electric Power Research Institute. An investigator for Florida’s Lake Worth Utilities, who asked not to be identified, puts it bluntly. “Oh, it’s increasing, but I have no idea why. Small and large [utilities], we all have it. It’s not like anyone is exempt. Knowledge is one reason why it is increasing. It’s easy to get the information on how to do it.” The issue is particularly worrisome for South Florida, Abbott says, because a number of its large immigrant population view filching electricity as more of a way of life than an illegal activity. “A lot of times it’s a situation where people say, ‘Well, that’s how we did it in the old country, just tap into the line,’ ” says Abbott, who recently consulted for Florida Power & Light Co., the state’s largest power provider. Estimates of the money that utilities lose through electricity theft vary. The Electric Power Research Institute of Palo Alto, Calif., estimates the loss caused by theft to 0.75 percent to 1.5 percent of utilities’ yearly revenue. Another frequently cited authority on theft, the Edison Electrical Institute, estimates yearly losses to utility theft in the U.S. at $2 billion a year. Larry Carmichael, a consultant with the Electric Power Research Institute, predicts regulated utilities will begin to explore how theft affects the bottom line because regulators nationwide are moving toward what’s called “performance-based rates.” In other words, Carmichael says, utilities will have to justify rate hikes to regulators with proof that they are trying hard to curb losses. “As you break the pieces of the utilities up and they become their own cost centers, you are going to see more scrutiny and more of a spotlight on profit and loss,” he says. How do thieves pinch electricity? Siphoning off power via jumper wires attached to the meter sockets is one way, according to industry magazine Electrical World. Turning the meter upside down to actually subtract from the total is another. Another method involves inserting a wire or broom fiber into the base of a meter, the magazine reports. That prevents a metal disk inside the meter from rotating. The cost squeeze and deregulation put a certain urgency to the matter. No numbers for electricity theft in immigration-rich South Florida are available. But if patterns abroad are an indicator, 10 percent to 16 percent in South America is pilfered, 10 percent to 20 percent in Mexico, and 20 percent to 40 percent in India — Abbott may be right about bringing along practices from “the old country.” RECOVERY EFFORTS U.S. utilities are meeting the challenge by beefing up theft investigation teams and putting more money and effort into recovery. According to the Edison study, the average utility in 2000 spent $700,000 on theft investigation and employed an average of 10 full-time employees in their theft investigation departments. Gary Signorelli, an investigator for the revenue protection department at St. Petersburg-based Florida Power Corp., estimates his company loses $10 million in revenue a year (of total revenues in the $3 billion range) from energy theft. The utility, a subsidiary of Progress Energy Inc., serves 1.4 million customers in the Tampa Bay area. Signorelli says his seven-person team has increased its yearly recoveries from $728,000 in 1996 to $2.3 million in 2000. The largest recovered loss was $45,000 — 29 months of unauthorized electricity use from a local business he declined to identify. Florida Power and Light Co. (FPL) maintains a 40-person theft investigation team. Bill Swank, spokesman for the Juno Beach, Fla.-based utility, said the company doesn’t estimate yearly losses from electricity theft. Swank said FPL collected $4.3 million in settlements in 1999, and $4.2 million in 2000. Swank says FPL collects about 90 percent of the money it back-bills. Though Swank refuses to talk about settlements, insiders like Plexus’ Abbott say FPL’s revenue protection department is known industrywide as aggressive. Over the years, a few high-profile theft cases with FPL made news. In 1995, the power provider alerted the Broward County, Fla., Sheriff’s Office that Mark Houston Myers used 13 aliases during seven months to pilfer some $2,200 worth of electricity. Houston later admitted wrongdoing. In 1994, FPL assessed a 76-year-old Fort Lauderdale woman $10,000 for meter tampering involving two small houses and an efficiency in Fort Lauderdale. An FPL meter reader had noticed a piece of fishing line in the meter that prevented a metal disk from rotating, according to published reports. After further investigation, FPL informed the woman she would have to pay $9,000. The figure included back billing. The woman paid $3,000 to get the service turned back on. It’s unclear whether the case was resolved. Be that as it may, theft investigation departments are no longer forgotten areas of utilities. “If you are trying to keep costs down, the only way you are going to do that is to do the right thing and keep up on your recoveries,” Signorelli says. “Don’t just write them off and sweep them under the carpet.” But the industry’s dirty little secret is that regulated utilities thus far have had little incentive to crack down on thieves, says Carmichael, the Electric Power Research consultant. Most giant utilities — FPL, for example, is regulated by the state’s Public Service Commission — bring targeted profits and losses to regulators and look for rate hikes to cover losses. But that is changing with deregulation. And in a deregulated environment, scrutiny pays off. PICKING TARGETS Today, all 50 states are trying to reform retail electric service. Some states have put pilot programs into place; 24 states and the District of Columbia have already instituted competition. Florida lawmakers this year placed restructuring bills on hold. Discouraging electricity theft isn’t easy. That’s because thieves usually aren’t prosecuted when caught. Some utilities argue they aren’t in the business of taking people to court, that they just want to recover the revenue and keep it from happening again. Others say it’s not good public relations to stick people with a criminal record for what many in the public see as a minor infraction. “There’s probably a reluctance to prosecute because these are considered social crimes,” said George Balsamo, an officer with the International Revenue Protection Agency, a trade group made up of theft investigators of utilities nationwide. “It’s a fine line you have to walk.” Signorelli of Florida Power says a decision to go to court depends on whether the accused thief is a repeat offender, on the value of the theft involved and on the method. But Signorelli also says a customer’s attitude can play a big part. “Look, we don’t go out saying, this is the day we are going to take someone to court. But if we are out to someone’s meter, and the guy wants to throw us off his property, that, of course, may influence our decision,” he said. Lake Worth Police Lt. Susan Wellborne says her city is in a different situation than other municipalities. The local power provider, Lake Worth Utilities, works closely with the police and the city’s code enforcement. The police department’s community policing units usually respond to meter tampering calls. “More so residential,” Wellborne said. “And generally, rental properties where there is a transient element, month to month.” Even though investigators agree that most reported thefts are residential, the heaviest dollar losses from theft come from small commercial customers — mom and pop restaurants are one example, says Bill Mayer, a consultant for Edison Electrical. Mayer says larger companies are less likely to engage in theft because of sophisticated billing and metering systems. Utility companies also tend to keep a close eye on larger companies. Leo Dalbec, administrator of the revenue protection department at National Grid U.S.A., a Massachusetts utility that serves states in New England, says utilities are recovering more as they refine their methods. “We find that as we improve ourselves and become more efficient, more astute and acquire technological means to address theft of electricity, we get better at finding it.” Dalbec says his six-member team has collected in excess of $1 million a year in since 1990. He says the utility’s largest residential theft case was nearly $200,000. The largest nonresidential case exceeded $500,000. Dalbec won’t say exactly what methods his team uses. “We have certain efficiencies that we have developed over the year that make our work more productive,” Dalbec said. “One of the best ways to lose the effectiveness of those efficiencies is to share them with the world.” Bill Nesbit, a utility consultant for 25 years, says anonymous reports from neighbors and ex-wives account for many tips on electricity theft. He said meter readers also play a key role. They are often the ones who recognize when a meter has been tampered with. More modern methods, Nesbit says, include computer-generated checks of consumption patterns. Customer accounts are flagged when sudden departures from normal usage occurs. But it’s often tough to get the persistent thief, experts say. Smith, for example, wasn’t thwarted when FPL padlocked his meter room. He simply bought bolt cutters.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.